The
Idaho Public Utilities Commission is accepting a business plan filed by Idaho
Power Company spelling out how the utility intends to treat the renewable
energy credits (RECs) it earns from its renewable energy sources. Customer
groups have differed over whether the RECs, or “green tags,” should be sold to
benefit customers or “retired” to meet possible future renewable energy
standards.

A
Renewable Energy Credit is issued to each utility for every megawatt-hour of
electricity generated by an eligible renewable energy resource. The RECs
represent a currency that can be traded on an active market to entities wishing
to support renewable energy.

RECs
are becoming more valuable as a growing number of states require their
regulated utilities to buy or generate a certain amount of power from renewable
sources. Idaho Power’s 101-megawatt Elkhorn Wind project in Oregon and its 13MW
Raft River geothermal project in south-central Idaho generated more than
320,000 MWh of RECs for Idaho Power in 2007 and 2008.

Last
year, after reconsideration, the commission directed Idaho Power to sell its
2007 and 2008 RECs and use the approximate $1.7 million in proceeds to benefit
ratepayers. Idaho Power originally requested that it be allowed to retire,
rather than sell, the RECs in anticipation of federal or state renewable
mandates. By retiring the RECs, Idaho Power said it could represent to
renewable energy certification programs and to customers that it is meeting
customer expectations for increased use of renewable energy.

Standards
established by Green-E Energy, the nation’s leading independent certification
and verification program for renewable energy, say that green tags sold by
utilities from a renewable project cannot be counted twice – by the utility
doing the selling and the purchaser. Thus, when Idaho Power sells its green
tags, the company maintains it can no longer represent to customers that customers
are receiving the benefits of renewable energy projects that carry green tags.
According to Idaho Power, the Green-E standards prohibit the utility from using
visuals of its wind or geothermal projects in charts, graphs or line art as
part of the green resources delivered to customers if the green tags that
accompany those projects are sold.

Idaho,
unlike many other states, does not require its regulated utilities to generate
a certain amount of its power from renewable sources. However, retaining the
green tags would allow Idaho Power to satisfy any future state or federal laws
imposing renewable portfolio standards, the company claimed in its original
filing.

After
the commission granted Idaho Power’s request to retire the tags, the Industrial
Customers of Idaho Power petitioned for reconsideration, arguing the value
associated with the RECs belongs to the ratepayers and should be sold to
benefit them. On the other side of the issue, the Idaho Conservation League and
the Renewable Northwest Project argued that the commission allow the utility to
retire the RECs.

After
reconsideration, the commission directed the company to sell the RECs. But the
order allowing them to be sold also required the company to submit a business
plan on how it intends to treat REC sales in the future.

In
April, Idaho Power submitted that plan which proposes that, in the short term, the
RECs be sold and the customers’ share of the proceeds be returned to customers
in the annual Power Cost Adjustment process. In the longer term, Idaho Power
plans to continue acquiring and holding contractual rights to own the RECs to
meet any possible future renewable energy standards.

Idaho
Power states there is a “reasonable likelihood” that a federal renewable
standard will be passed by Congress that will require the company to obtain and
retire RECs for compliance. “However, because of current economic conditions
and recent increases in costs and customer rates, the basic philosophy of Idaho
Power’s REC Management Plan is to sell its RECs in the near-term,” the company
stated.

The
Idaho Conservation League and the Renewable Northwest Project also opposed the
company’s plan for handling future RECs. They said the plan fails to consider
the value of REC retirement and that it should explain how Idaho Power intends
to sell its RECs and still comply with REC market guidelines.

Idaho
Power customer Annie Black said the environmental benefits that should be
accorded the company and its customers are stripped away when the REC is sold,
contrary to the state’s energy policy requiring a diversified energy portfolio.
Black requested a hearing to review the implications of Idaho Power’s proposed
plan or, if a hearing is denied, that the commission not accept the plan.

The
commission, denying requests for further hearings or that the plan not be
accepted, noted that accepting the plan as filed does not mean the commission
endorses its specifics.

“As
noted by the commenters in this case, the REC system is a complicated market
that is still developing and varies from state to state,” the commission said.
“We expect Idaho Power to remain fully engaged in REC market developments and
to comply with proper procedures regarding representations of renewable energy.
We further direct the company to submit a modified REC management plan when a
change in state or federal energy policy warrants such actions.”